It’s official: FHFA will delay g-fee hikes

by Ryan Smith08 Jan 2014
The Federal Housing Finance Administration today officially announced that it would delay the implementation of guarantee fee hikes originally slated to take effect in March and April.

The planned fee hikes were announced in December by then-acting FHFA head Edward DeMarco. DeMarco said the fees, which are charged to cover potential losses by Fannie and Freddie, were being raised as part of an ongoing effort to lure private capital back into the mortgage market and lessen government involvement in the mortgage market.

“The price changes provide better protection of and return to taxpayers, who are providing the capital support that keeps these companies operating,” DeMarco said last month.

But industry heads blasted the plan, pointing out that the increased cost of the fees would be passed on to borrowers.

“It’s all passed on to the consumer, and it’s going to make mortgages more expensive,” National Association of Independent Housing Professionals President Marc Savitt said last month. “That’s the only way to describe it. … Every time they raise the g-fees, in reality it’s a tax on home ownership, which they don’t need to be doing right now.”

Newly-appointed FHFA Director Mel Watt had announced even before being sworn in Jan. 6 that he planned to delay the fee hikes. In a statement today, Watt said he intended to evaluate the proposed hike’s likely impact. He also said the FHFA would provide at least 120 days’ notice after completing the evaluation before implementing any changes to the existing fees.

“The implications for mortgage credit availability and how these changes might interact with the new qualified mortgage standards could be significant,” Watt said. “I want to fully understand these implications before deciding whether to move forward with any adjustments to g-fee pricing.”


  • by being human | 1/8/2014 8:25:54 AM

    Just get rid of reverse mortgages and no fees will have to be raised. Now the brainiacks are approving reverse mortgage purchases. When will the madness end?

  • by Troy Cyrus | 1/8/2014 8:31:26 AM

    Kudos to Mel Watt for a reasonable decision to review Mr. DeMarco's knee jerk reaction. Hopefully, Mel gains clarity that these costs are passed through to borrowers and it ultimately is harmful to growth of home ownership. We could just be kicking the can down the road though with his track record.

  • by commonsense! | 1/8/2014 9:28:45 AM

    being human - you obviously dont understand the reverse mortgage market. It has nothing to do with Fannie/Freddie. This increase is due to conventional mortgage issues. ( I do agree that it shouldnt be raised). FHA increases the mi premium to cover "potential losses". They are required to have eneough cash on had to cover forcast losses. This is madness. The reverse market is so small in comparison to the rest of FHA. They are using it as a scape goat for the rest of the program.


Should CFPB have more supervision over credit agencies?